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Will Congress avoid the ‘fiscal cliff?’

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    Liz Peek and David Weidner on what Capitol Hill negotiations mean for US economy

  • Duration 10:26
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Let's talk about all of this with -- esteemed journalist joining me now Liz -- at Liz peek from foxnews.com comments and David we hear from MarketWatch.

You are in -- comments as well thanks for coming on other some new ways to start this discussion and I guess maybe we should go through some of the effects of the fiscal cliff capital gains and dividends taxes -- at 15% right now those are gonna go up right.

Right -- -- you have a series of tax hikes which cumulative of the amount to about 400 billion dollars and per year.

And -- includes basically rolling back all the things -- George W.

Bush did.

In terms of lowering tax rates so it affects.

Dividend income capital gains tax it also -- things like that AMT patch which.

If you know affects a lot.

Middle class Americans millions and middle class Americans.

-- it it's it's -- really very sizable.

It's huge it's huge and and that the problem is.

That Republicans are being held accountable for.

And will be held accountable probably if this doesn't get resolved very quickly the problem is they really want to exact some.

Measure of progress on entitlement reform.

Before.

Exceeding two tax hikes and I think -- totally right because we've seen in 1990.

George H walker bush agreed to raise taxes on the premise that congress have come through later with tax.

-- was spending cuts and they never did and that happened also -- Reagan so.

We we really should be focusing on.

Both sides of the equation spending cuts and tax hikes what.

Obama did President Obama in his press conference is -- -- much more aggressive on the revenue side.

And unfortunately having just met with his major constituency.

Which is them left and union leaders and so -- And having had had them and Harry Reid say no question we can't touch entitlement reform.

That is the issue that's the problem Democrats won't touch entitlement reform and that Republicans don't want to give up on taxes before they do.

I would have to agree with.

Everything that's been said including your earlier -- talked about how this would be -- very dramatic for consumers and how disruptive this would be for consumers.

We're talking about a recession.

If we go over the so called fiscal but.

You know under protest.

I I feel that some of the -- that has been built baked into this whole discussion it is is.

As problematic as anything else.

We are not gonna go over fiscal cliff and we are not gonna see these dramatic cuts the military -- Americans through these dramatic cuts to.

Programs that people depend on.

What's gonna happen is we are gonna get a deal and it may be ugly still face of the earth where isowich -- last year still wasn't way -- because we just kicked the can down broad.

I think we're gonna get a combination of something where we do get some spending cuts some tax increases next year.

Most everything else I think it's gonna be either kicked down the road or.

They're gonna buy themselves time.

In a lot of these things will be phased in over time there for the economy is just too fragile to do anything dramatic right now I think both sides recognize this.

And so I think we're you know.

You US rich what he -- I think that we are.

It may be eleventh hour because sometimes you don't get -- concessions until you hold the opponent.

And our -- gets sort of slap dash arrangements such as what as you -- -- -- -- dealing with right now.

Mean I think everyone who looks at such matters agrees the tax reform is a very necessary thing -- tax code is.

Bizarrely Byzantine.

Complicate.

I had to answer I think you're right now the US into that in 2009 -- three years ago we were ranks number two in the world.

In terms of being a good place for business.

We're number twelve right right now and -- New -- number want.

It takes a business on average a 175.

Hours a year to figure out how to comply -- Tax -- it's terrible and it and by the way it's not just cumbersome.

It creates all kinds of incentives that I think it.

Sane people in this -- -- would say are terribly wrong for example.

We have so many incentives for people to buy a house okay what what we've seen is that's directed.

Far too much capital into housing over the last decade and a half let's say.

And and yet we continue to do it I mean it's sort of like okay we really shouldn't have second homes halve the mortgage.

-- to be deductible on second homes and all kinds of things that are embedded in our tax cuts was not.

That's what I hate about this eleventh hour potential compromise and you're totally right that's probably what we'll have taken -- instead of thoughtful.

You know session where people sit down look the last thoughtful group that looked at this.

Entire issue of taxes and deficit reduction -- Simpson -- there you had people on both sides of the aisle.

Represented almost every major interest group they came up with.

Measures that were harsh to some.

Probably necessary across the board but their message I was gonna start us off by saying there are two fiscal -- there's this one has been gerrymandered by congress.

They're using more profound one which was really what.

Drew the attention of some symbols and was the reason -- -- commission to be created.

Which is that we -- looking entitlements growing totally out of proportion -- economy over the next.

In thirteen years our government revenues will cover Medicare Medicaid social security and interest that's it.

Every other dollar for defense and every other federal program -- -- and that's what got some samples aggravated and intends intend on solving this problem and it really is what should be motivating us now and it's not gonna happen if we're.

You know racing around patching things up at the last minute to.

You know what you know I agree -- that -- and I think that.

You know.

Even if we get a deal.

That.

It is somewhat uncomfortable for everybody and if it is -- comfortable on the body then it's that it.

Good Friday -- MY if I think if I'm a middle class American I'm sitting there and I'm.

I'm losing precious things to me like media marketing advantage of mortgage interest like that was before and maybe a foreign you know it is.

Part of the so called 1% and my and my tax rates are gonna go up.

And maybe if I'm an investor and when I have to pay some more taxes on my capital gains.

If everybody is sort of sharing the burden.

And and we get a good deal at the end.

That would be wonderful I'm I think that in the end that's how we'll judges is right everybody sort of miserable feeling at all claiming that -- -- But I just -- I am worried about.

This brinksmanship idea -- that we do damage -- we've seen how the stock market has reacted.

Since the election since this since I mean.

-- has gone completely.

On -- on it yet while we got some of the election this and then we're six Chicago way can you imagine what investors are going to be doing.

We're -- you know I mean Citi exactly portfolio is gonna end 2012.

Probably.

I would even say where -- -- you can -- -- -- ended 2011 Michael -- backs them.

Well it did there's going to be a lot of panic in the market -- -- In the -- as we don't know anything as we get closer that they people are going the volatility it's -- it's going to be her side.

-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- really -- absolutely that was the message that this.

Kind of hapless jobs council brought to the White House yesterday is just get it done -- -- you know give us some certainty how can you operate.

Large corporations or small businesses when you have no idea what your obligations are to their employees.

Or what your taxes are gonna look like -- the summer and now it's it's really don't like -- that he was announced that we'll that's why.

Wall Street expected.

Present -- Obama to be reelected.

But they wanted Romney in office they want -- Republican.

In office they wanted obamacare repealed.

Yes -- end -- just I just wanted someone to say it's okay -- To loosen the purse strings a little bit and spend some money on the would -- the idea that.

If you make more than 250000 dollars -- rich.

It depends where you live doesn't really.

I would I would -- for the majority of the country that's that's a true statement that if you make more than 250000 dollars you're rich.

In you know certainly in New York City and some of the higher you know I -- have -- come -- Tour for 2000 dollars is.

Very very good living it is I would say it is upper middle class.

But you know I -- not rich if you if I.

-- you and I -- begins when you're making much money you're not getting financially you putting your kids through college at.

50000 dollars a year in some cases inflation is up we got that retail inflation report today rents rose by the most in four years.

Young and you know killing food right gas went -- -- everything's going up so.

The issue is is that you unfortunately we have to have a tax code that.

Apply for the entire country and we can't do it regionally and say -- analyst of living is higher and there he can try to make exceptions.

And this -- why it's become kind of a Byzantine hand process to begin with is that.

You know the tax code has tried to make allowances for the different ways people live in -- different environment.

But it's its economy the whole thing giant -- Reality you you -- -- begin in hiding for Steve Forbes and -- flat tax right and you get really made so much sense that it was so simple and so directing.

-- and it just seems like there's this it.

So must cool to hate the -- right now or how he would have been about class.

That's -- deals.

We that -- that can't Mena look unfortunately.

I actually wrote over a year ago.

That Republicans should agree to raise taxes.

On the top one or 2% of Americans -- because that is the only message we heard from President Obama is the only idea he campaigned on.

What else has he had to sell and if it taken that off the table.

You know I don't know what -- would have been talking about can't thank you thanks so much for joining us -- peaking David widener appreciate your commentary -- the us is not.

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